Mobile, Internet costs added to Russian consumer basket

(Business New Europe – bne.eu – February 15, 2013)

In a sign of the times, Russias statistics agency, Rosstat, is going to add the cost of hooking up to the internet and monthly spending on mobile phone bills to the consumer basket that is used to calculate inflation, amongst other things.

The Russian economy is increasingly being driven by consumer spending and with both mobile phone and internet use almost saturated, these costs have become part of most households monthly outgoings.

VTB Capital reported last year that Russias Internet market has reached saturation with a penetration of 65% of the population on a par with the rest of Western Europe. Likewise, SIM card ownership has been well over 100% since about 2004.

Russia is already the biggest mobile phone market in Europe many times over, but became the fourth largest fourth generation (4G) telecoms market in the world last summer. Russia now has 650,000 users of 4G services that are based on the Long Term Evolution (LTE) technology, according to the Communications Ministry, behind only the USA, South Korea and Japan.

Prime Minister Dmitry Medvedev said Thursday: “Indeed, it is time to include this (mobile and Internet costs) into the (consumer) basket,” according to RIA Novosti.

Deputy Communications and Mass Media Minister Denis Sverdlov said earlier that communications services should become the same common services as house utility services are for users.

“Mobile and Internet services have long become a part of the Russian citizens’ common life. That is why we introduce the notion of users’ rights protection in the new version of the communications law,” spokeswoman for the Communications and Mass Media Ministry, Yekaterina Osadchaya told PRIME.

The inclusion is timely and comes a month after Sberbank CIB launched its Ivanov Index that tracks consumer spending habits and offers stock recommendations that are designed to capitalize on the growing power of the Russian consumer.